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Why The Fed (our Central Bank) operates a Global Financial Ponzi Scheme!

April 17, 2012

Let’s think about how our Federal Reserve (really a private institution) earns its income!

 The Fed’s gross income for 2009-2011 was as follows (according to CNN Money, unaudited numbers):

2009:  Gross Income $53.4 billion with $6 billion spent for their operations

2010:  Gross income $80.9 billion with 4.3 billion spent for their operations

2011:  Gross income $83.6 billion with 4.7 billion spent for their operations

The above numbers are probably representative of the income booked (mostly interest income) from the operations of the Fed’s balance sheet (now some $3 trillion). Let’s think about how this income (and the increase in their balance sheet) is acquired given that our Fed (really a private operation) receives NO appropriation from our Congress (representatives of the American people). The Fed’s balance sheet has increased from around $800 billion in 2008 to near $3 trillion today. How can this happened given that our Fed is legally a private organization?

We call our Central Bank a Federal Reserve Bank yet this institution receives NO appropriation from our elected Congress (who is supposed to represent us and pay for all our collective government operations)…and then the Fed receives its income or revenue from collecting mostly interest on ‘money’ that it creates…out of nothing. In other words our Fed earns no real income (legitimately) nor does it receive tax payer funds (as it should if it was representing the American people) but creates ‘imaginary’ book entry dollars to purchase assets and then it charges interest on the ‘money’ that it creates (out of nothing)…and calls this result…INCOME.  What a neat accounting operation! What kind of example does this operation set for the real market of traders and investors? The Fed tends to justify its accounting gimmickry by returning excess income each year to the Treasury (some 79 billion in 2011 was transferred from the Fed’s books to Geithner’s, our Treasury Secretary). Was any of this earned honestly and fairly by this private institution that we call The Fed?

Today, this accounting operation (really a huge Ponzi scheme) can funnel no interest dollars (created out of nothing) to select dealer banks who then earn their income from the interest spread. Wouldn’t you and I like part of this scheme for our investments and savings? We could borrow unlimited dollars (no interest or near zero interest) and then reinvest these dollars in low risk government bonds and earn the spread with no risk to us! What does this reveal to the American people and to those of us who desire knowledge about MONEY? Is the Fed a Moral Hazard?

First of all, our Congress and our President can be purchased for a ‘price’ (it seems). This is what most likely happened back in 1913 when the Federal Reserve Act was passed (the night before Christmas Eve) when most of our Congress was not even present to vote on this Act. The Act passed and it was then immediately signed by our then President, Woodrow Wilson. This Act was passed even though it completely contradicts our Constitution (Article I, Section 8) and the common sense of most American voters. A select few devious men and their accounting friends (probably with ‘good’ intentions) manipulated the Act through our Congress and then created what today has become a huge Ponzi Banking Operation (which operates all our monetary policy for the benefit of the TBTF banks and other global financial institutions).

I now can understand why this operation (mis-named The Federal Reserve) desires to operate in SECRET and without any public transparency in realtime. This whole operation is really a huge PONZI scheme (as many others now recognize…see below) and it works as long as no-one bothers to understand its operations and as long as our deluded Congress desires to accommodate this scheme. This entire operation is set up (legally) as a private institution with NO legal responsibility to our Government administrators or to the American people. They maintain their legal image by updating the Federal Reserve Act when situations demand a change in the LEGAL language. Who would set up this type of operation and why?

Could it be that the few who set up this operation (back in 1913) had an agenda that was also very SECRET and/or philosophically transcendental (and mischievous)? Paul Moritz Warburg, one of the master minds behind this Act,  was most likely the accounting genius behind the Ponzi scheme which we call the Fed:

Paul Warburg

Paul Warburg

Who was he: Paul Moritz Warburg was a German-born, Jewish-American banker who was an early advocate of establishing the Federal Reserve System in the United States. In 1907, Warburg published Defects and Needs of Our Banking System and A Plan for a Modified Central Bank. After the creation of the Federal Reserve in 1913, President Woodrow Wilson appointed Warburg to the first Federal Reserve Board where he served until 1918. Following the twisting path of the Warburg family from Venice to Germany to England to the United States is a microcosm of the path to power, control and takeover of the American and British Empires by the Anglo-American Axis. A friendly competitor in the Axis, Mayer Amschel Rothschild best explained their “modus operandi” of subverting and controlling the political power in a nation when he frankly stated: “Give me control of a nation’s money and I care not who makes her laws.”

 To understand this accounting shell game (which creates its own accounting rules and banking manipulations) we need to read about the history of money and power. Those who understand MONEY, also understand that POWER follows from controlling the MONEY. A great book to read on the thinking which created our Fed in 1913 via the Federal Reserve Act is: The Creature from Jekyll Island,

Who set up this accounting system for this organization that we call The Fed? As tax payers we allow this institution to buy our bonds (debt) with no income of their own (they create an imaginary book entry to serve as their income) to purchase our government debt…and then they collect INTEREST on their purchase amount (at the going market rate)…and they secretly operate their accounting scheme with NO realtime oversight or public transparency as they funnel our ‘dollar’s from their books to the books of their dealer banking friends.

Where is this leading as of 2012 and beyond? It now appears that our entire economy and our monetary System has been taken over by a devious MONEY CARTEL which is attempting to create a ONE WORLD MONETARY SYSTEM with the elite and a select few in CONTROL. Rulership over MONEY can lead to RULERSHIP over our entire planet! Now is the time to get yourself educated on the issues of MONEY and POWER. Our next President (assuming Obama is defeated in 2012) will most likely be purchased for the schemes of these elite Power Brokers who have plans for rulership over Planet Earth. Think it over!

P.S. Some great websites for education are:,, and the video 

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. –James Madison

Ponzi Scheme video from Fox News:

 Bill Gross calls the Fed a Ponzi Scheme: 

 “Instead of simply paying for maturing debt with receipts from financial sector creditors … the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers,” Gross writes. “There is no need — as with Charles Ponzi — to find an increasing amount of future gullibles, they will just write the check themselves.”


8 Comments leave one →
  1. April 25, 2012 7:37 am

    I think that America should issue supplemental currency circumventing the Fed, at least sometimes. That would allow the nation to get out of debt. The Fed is keeping interest rates low on government debt, trying to help the government. No telling how long that will last. There is no debt on money directly printed in circumventing the Fed. My gripe with the Fed is not liquidity in the system, although a greater percentage of that liquidity should be from the issuance of “greenbacks”. My gripe is that the Fed does not stop massive speculation in commodities.

    The three trillion on the Fed’s balance sheet does bring in income. A lot of it are assets that no one wants to buy in the market. The Fed does serve a purpose in that process that is important. We would face a massive depression without the Fed. But, the Fed should be nationalized.


    • April 25, 2012 5:36 pm

      Gary: I agree that the markets are being manipulated…especially by our new technology called the HFT computers (now used by all traders globally). The Fed, however, creates a Moral Hazard with its own manipulations of the markets via QE and Operation Twist, etc. QE is really a form of ‘official counterfeiting’ of our $. Also, the $3 trillion of balance sheet (called asset purchases) are really bogus as they were acquired via this counterfeiting of our $. The Income derived from these assets makes this operation doubly bogus as this Income is also a result of accounting gimmerickery. I, personally don’t blame the traders and investors for their manipulations when their ‘boss’…Bernanke and his committee…manipulate the markets daily with their private actions. D


    • Ian Mathers permalink
      April 25, 2012 11:12 pm

      The threat isn’t in the interest which they generously ‘return to the Treasury’, it’s in the principal amount which is not repaid (indeed, it is increased as new borrowing), and remains as indebtedness to the creators of the imaginary ‘money’…..One day, that ‘debt’ will have to be balanced with real assets like land and resources. That’s what the banks want to control, and the self-indulgent, pompous politicians, thinking they are in charge, are one day going to settle those obligations with your assets.


      • April 26, 2012 8:27 am

        Ian: What makes the Fed such a Ponzi scheme is that they create imaginary money units, then purchase assets, then sell some of their assets to the greater market, they then receive new dollar units to further manipulate the markets. What a scheme to operate with no oversight by our elected representatives in realtime. They now have some $3 trillion to use to manipulate the markets (money that did not represent any real wealth for our economy). Bernanke sure does not understand money or its role (purpose) for our economy. What affects me most is the Moral Hazard that this whole scheme represents.


  2. April 25, 2012 6:17 pm

    I don’t think that the liquidity of the QE is the worst thing, since we don’t issue interest free currency. I think the speculation that comes from banks being able to drop off crap assets should be curtailed and the banks be forced to lend into the real economy.


    • April 25, 2012 8:44 pm

      Gary: I agree that the dealer banks should not be allowed to sell ‘crap assets’ at par to our Central Bank. Bernanke, however, seems to think otherwise. His balance sheet is full of ‘crap assets’. Capitalism can not work with this philosophy…going forward. D


  3. Danny B permalink
    April 25, 2012 7:00 pm

    Taxation is necessary, not primarily as a revenue source, but to provide cover for the REAL sources of funding–currency debasement and borrowing. If governments stopped taxing, neither of these two would work. In the case of currency debasement, the jig would be up, as even the slow learners among the population would be asking where the government is getting the money. And without the taxing power, lenders to the government would be wondering where their repayment with interest is going to come from. Of course, the joke’s on both of them–the taxpayers will be cheated in a dozen elegant and subtle ways by inflation, and the government’s creditors will be repaid not with tax money but mainly with currency created out of thin air


    • April 25, 2012 8:47 pm

      What we now need is for the ‘slow learners’ to become AWARE of how the banks operate. How money is created. And the operation of our Federal Reserve System (really a private legal operation which protects the dealer banks…not the American taxpayers). D


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